Supreme Court confirms VAT applies to NHS hospital car parking
The UK Supreme Court’s decision on hospital car parking charges has ruled in favour of HMRC, but what does this mean for NHS Trusts? Liaison Financial’s Head of Tax, Kenny Lee, provides an update…
29 October 2025
After nearly a decade of litigation, the Supreme Court has delivered its final judgment in the landmark Northumbria Healthcare NHS Foundation Trust v HMRC case. The ruling confirms that VAT must be charged on hospital car parking services provided by NHS trusts.
Background
Since 2016, Liaison Financial has supported NHS organisations in challenging HMRC’s stance on VAT for hospital car parking. In early 2024, the Court of Appeal ruled in favour of Northumbria, finding that the Trust operated under a special legal regime (SLR) and was therefore exempt from VAT.
Supreme Court Decision
In October 2025, the Supreme Court overturned the Court of Appeal’s decision. It held that:
- Department of Health guidance does not create a binding legal obligation sufficient to establish an SLR.
- The Trust’s car parking services are subject to VAT.
- Exempting NHS trusts from VAT would cause distortion of competition with private car park operators.
Implications
This ruling has significant consequences for NHS organisations with outstanding VAT claims related to car parking. Liaison Financial’s team will be consulting with Counsel and providing advice and next steps to clients in the coming days.
Kenny Lee, Head of Tax at Liaison Financial, says…
Although this wasn’t the outcome we hoped for, it reflects the complex nature of hospital car parking operations. We will move forward by supporting our NHS clients to review their parking policies to ensure they maximise benefits for patients, while awaiting further direction.
We remain committed to ensuring that NHS organisations pay VAT both accurately and correctly, and will continue to explore all available options to minimise costs and maximise resources for trusts.
Supporting our clients
Liaison Financial remains committed to supporting clients through this outcome. Our Tax team will be providing guidance in light of the decision directly to clients shortly.
If you have any questions or would like to discuss this issue further, please get in touch with our Tax team.